Correlation Between CEZ As and Mercator Medical

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Can any of the company-specific risk be diversified away by investing in both CEZ As and Mercator Medical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CEZ As and Mercator Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEZ as and Mercator Medical SA, you can compare the effects of market volatilities on CEZ As and Mercator Medical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CEZ As with a short position of Mercator Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and Mercator Medical.

Diversification Opportunities for CEZ As and Mercator Medical

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between CEZ and Mercator is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as and Mercator Medical SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercator Medical and CEZ As is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CEZ as are associated (or correlated) with Mercator Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercator Medical has no effect on the direction of CEZ As i.e., CEZ As and Mercator Medical go up and down completely randomly.

Pair Corralation between CEZ As and Mercator Medical

Assuming the 90 days trading horizon CEZ as is expected to generate 0.59 times more return on investment than Mercator Medical. However, CEZ as is 1.69 times less risky than Mercator Medical. It trades about 0.08 of its potential returns per unit of risk. Mercator Medical SA is currently generating about -0.06 per unit of risk. If you would invest  14,810  in CEZ as on September 5, 2024 and sell it today you would earn a total of  1,210  from holding CEZ as or generate 8.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

CEZ as  vs.  Mercator Medical SA

 Performance 
       Timeline  
CEZ as 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in CEZ as are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CEZ As may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Mercator Medical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mercator Medical SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

CEZ As and Mercator Medical Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CEZ As and Mercator Medical

The main advantage of trading using opposite CEZ As and Mercator Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As position performs unexpectedly, Mercator Medical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mercator Medical will offset losses from the drop in Mercator Medical's long position.
The idea behind CEZ as and Mercator Medical SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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